June natural gas is expected to open 4 cents lower Wednesday morning at $2.01 as traders balance near-term supportive weather but at the same time develop strategies for a market that is close to breaching technical support levels. Overnight oil markets were mixed.

Technical analysts at Societe Generale see the market at an important support level. “At $1.60 [March], it has retested lows formed in 1997/1998/1999 and has also met the projected target for the fifth wave (Elliott standpoint). Formation of a monthly hammer along with long-dated indicators, which have started to inch higher from support, highlight a significant bottom appears to be in place.

“After a steady rebound, natural gas has tested the upper limit of a multi-month descending channel at $2.29 and is currently undergoing a retracement.”

Relative to the July contract “it is now testing an immediate support of 2.16, the 50-day moving average. With daily RSI [relative strength indicator] near a support a retest of $2.29 looks more likely. A break above will lead to a larger rebound toward graphical levels of $2.47/2.54. Only a break below $2.16 will mean the possibility of a retest of recent lows of $2.05 with next support at 1.94/1.87.”

The July contract settled Tuesday at $2.185.

Tuesday’s modest advance was seen as the market focusing on Thursday’s storage report. “The temperature outlook was little changed from a day ago,” said Tim Evans of Citi Futures Perspective. “[B]ut there may have been an increased focus on Thursday’s DOE storage report for the week ended May 13, with consensus expectations for 75-80 Bcf in net injections, a step down from the 91-Bcf five-year average refill.”

It may be one of those market drivers that is only realized well after it happens, but current cool temperatures have the capability of tempering what is expected to be a robust injection season. It is shoulder season, and weather patterns are not known for their market-moving capability, but according to the National Weather Service (NWS), “Temperatures will be 10 to 20 degrees below average from the central Appalachians westward to the central/southern Rockies and southern Plains.

“Numerous showers and thunderstorms will move through the Southeast [Wednesday] as a frontal boundary pushes through the Eastern U.S. Much of the Mid-Atlantic, Southeast and southern states will persist in having below-normal temperatures. Many locations will have afternoon highs up to 20 degrees cooler than those typical for mid-May,” NWS said.

In overnight Globex trading June crude oil rose 5 cents to $48.36/bbl and June RBOB gasoline fell fractionally to $1.6324/gal.